A Chapter 13 bankruptcy plan payment can't extend longer than five years. A plan can be shorter if the filer's income is low enough to qualify or if the filer pays the required unsecured debts in full.
If you file for Chapter 13 bankruptcy, your case will most likely close shortly after you finish paying your three- to five-year court-approved repayment plan. In Chapter 13, you make monthly payments to a Chapter 13 trustee, who then distributes that money to your creditors under your plan. Some cases wrap up early through a full payoff or a hardship discharge. Others might not close immediately after you complete payments, possibly staying open more than five years because of litigation or paperwork you have to file after your last payment.
What Determines Your Chapter 13 Plan Length?
Your gross household income, compared to your home state’s median income for your household size, determines whether your plan runs three or five years. If your income falls below the median of your state, you only have to propose a three-year plan. If it sits at or above it, you must propose a five-year plan. (11 U.S.C. § 1322.)
| Key Factor |
Three-Year Plan |
Five-Year Plan |
|
Income vs. State Median |
Your income falls below the median for your household size. |
Your income is at or above the median for your household size. |
|
Monthly Payment |
Higher, since the same total is paid off in fewer months. |
Lower, since the total is spread across more months. |
|
Catching Up on Secured Debt |
You must catch up on missed mortgage or car payments faster. |
You get more time to catch up on missed payments. |
When Can Your Chapter 13 Case End Early?
Your case can end before its scheduled finish date in two situations: a hardship discharge or an early payoff of your required plan amount.
Hardship Discharge
A hardship discharge lets you exit Chapter 13 early if a hardship beyond your control—a job loss or a serious illness, say—makes it impossible to keep making your plan payments. (11 U.S.C. § 1328(b).)
100% Payoff
When you pay your creditors in full, your plan can end sooner than the required time frame because no further payments can be made.
However, you can't simply pay the plan amount faster, because your creditors are entitled to your disposable income for the entire length of your plan. Your disposable income is roughly the amount remaining after you pay required amounts. If you were to receive a raise or a windfall, like an inheritance or lottery win during the plan period, your creditors would be entitled to it up to full payment of their debts.
Why You Might Choose a Longer Plan Voluntarily
Even if you qualify for a three-year plan, you can pick a five-year plan instead to spread your required payments out and lower your monthly bill. Three requirements usually drive this choice.
Best Interest of Creditors Test
This test requires you to pay your unsecured creditors at least as much as they’d get in a Chapter 7 case. If meeting that amount over three years would make your payments unaffordable, you can spread it over up to five years instead. (11 U.S.C. § 1325.)
Disposable Monthly Income Test
The court will only confirm your plan if you put all your “disposable monthly income” toward your debts, which is the amount left after expenses. You can find the minimum total you must pay by multiplying your disposable monthly income by 36 months. Spread that same total over five years instead, and your monthly payment drops. (11 U.S.C. § 1325.)
Paying Back Arrears on Secured Loans
If you want to keep property tied to a secured loan, like your car or home, you’ll need to catch up on missed payments by the end of your plan while keeping current on your regular payments. Spread those arrears over five years instead of three, and your monthly hit gets smaller.
What Can Make Your Case Last Longer Than Your Plan?
Litigation over a disputed debt, or paperwork you have to file after your last payment, can keep your case open even after your plan technically ends.
Litigation Over a Disputed Claim
If you dispute what a creditor says you owe, you’ll litigate that dispute in bankruptcy court through what’s called an adversary proceeding. Like any lawsuit, it can drag on for years, especially on appeal. When litigation outlasts your plan term, you’ll typically keep paying the trustee for the disputed amount alone while the trustee holds that money until the court rules. That means your case can run for more than five years.
Trustee’s Final Report and Accounting
Once you finish your plan payments, the trustee still has to file a final accounting report detailing every dollar you paid and how it was distributed. That audit can take a couple of months, so your case technically stays open for a while after your last payment.
Certificate Regarding Domestic Support
You also have to file a certificate confirming you either owe no domestic support or are current on it before the court will grant your discharge. Finish your payments but skip the certificate, and your case sits open until you file it.
How Long Your Chapter 13 Case Will Really Take
Plan on three to five years for your Chapter 13 case, plus a short period for the trustee to close out the paperwork after your last payment. Early payoff or a hardship discharge can shorten that, whereas a disputed debt or a missed certificate can stretch it.
How Long Does It Stay on Your Credit Report?
Even after your case closes, the bankruptcy itself stays on your credit report for seven years from your filing date, which is three years shorter than the ten-year reporting period for Chapter 7. That period extends only two years after a five-year plan, so you'll likely recover your credit score quickly.
What to Read Next
If you’re worried about keeping up with your plan or wondering what your options are if things change, these related articles can help: